How much money do i have to save to reach a wanted amount

When you are saving money it is useful to know how much you can safe in time. This article goes in on how you can determine your saved amount based on certain inlay and an interest rate. If you want to know how much you need to put in per month to reach a specific amount, then you can find the answer here.


Saving, how much do you put in?

We all want to have some money aside for later, so we can buy something then or make a nice far trip. But how much do you monthly need to safe reaching a specific amount? It all depends on how you want to save money. You can put in a certain amount once and let it grow due to yearly interest. Another way is to put in money on a monthly basis so that you can reach your goal in time without a starting capital. This article provides inside in how much interest on interest with monthly inlay can reach a specific amount after a certain period.


How does money grow without extra inlay?

To save you can put in some capital once after which it grows steadily year after year due to interest buildup. As you don’t withdraw anything from your savings account, it can grow with the passing of months and years. What if you put in once 8,000 dollar and you can get an interest rate of 5.25% per year, how much will it bring you after 6 years of interest growth. You can do the following:

  • Saving = B * (1 + i)n within that the following elements;
  • B = the amount you put in initially;
  • i = interest rate which you receive yearly;
  • n = number of years you park it in your savings account.

In precious example it results in this:

  • Saving = 8,000 * 1.05256 = 10,875 dollar;
  • This means that you receive 2,875 interest during 6 years.


Capital growth with monthly inlay

What if you want to lay in money on a monthly basis, how can you calculate it? How much money can you buildup when you put in a certain amount:

  • Saving = S * ((1 + i)n -1) * (1+i) / i within it the following elements;
  • S = inlay per month;
  • i = interest rate you get per month: i/month = (1 + i/year)1/12 – 1;
  • n = number of months you park it in your savings account.

What if you can put aside 65 dollar per month, what will it bring you if the interest rate is 4.5% for 8 years?:

  • Interest rate per month = r/month = 1.045 1/12 – 1 = 0.003675 = 0.3675%;
  • Savings = 65 * (1.0036756*12 – 1) * 1.003675 / 0.003675 = 5,366 dollar.

Of that you have put in 65 * 6 * 12 = 4,680 dollar yourself and so you have gained 686 dollar on interest.


How much inlay per month to reach a certain amount?

An important question is how much you need to save on a monthly basis to reach a specific amount after that time. The variables are the same as with capital growth with monthly inlay, but now it is based upon a saved amount as a goal. You can do the following:

  • Inlay per month = ((goal * i) / (1+i) / ((1+i)n -1) within it the same elements as previously mentioned.

Assume you want to save 80,500 dollar in a period of 15 years. You can get an interest rate of 6%, how much do you need to put in to reach this goal?:

  • Interest per month is: 1.061/12 – 1 = 0.004868 = 0.4868%;
  • Inlay per month = ((80,500 * 0.004868) / 1.004868) / (1.004868180 – 1 ) = 279 dollar per month;
  • With a total of 50,526 dollar inlay over 15 years you get 30,244 dollar interest compensation.